Cloud computing is a relatively new technology, but has gone on to become one of the hottest buzzwords around since its emergence in the last couple of years.
The fundamental idea behind cloud computing is simple: a ‘cloud’ is essentially a cluster or a bunch of different computers and computing resources that are offered as a service over a network – such as over the internet – in order to accomplish certain business tasks, for instance.
This network of computers is the proverbial ‘cloud’ here, and in other words, a network of computers and computer resources exists ‘in the cloud’. These resources can be accessed at any time, from anywhere in the world, and can help businesses accomplish a certain purpose – such as run a software or store data.
For businesses, cloud computing specifically refers to offering software (typically known as SaaS or Software as a Service), services and databases over a network. This entails the acquisition of the required cloud-based services from certain service providers, who are responsible for managing all aspects of the service that they provide, such as the infrastructure, security, and the platform for the service.
SaaS is a very interesting model, especially for small and medium businesses – software and services are hosted centrally on servers or ‘on the cloud’, the client can access the software and/or any other services over the internet, typically using a client (such as a desktop-based application or a mobile/smartphone app) or the web browser.
Business applications such as Microsoft Office, management services including Database Management software (DBMS), accounting and finance software and services, customer-relationship management software and services, enterprise resource planning (ERP) services, management information systems, CAD and development software and services, as well as human resource management software and services are now being provided to businesses through the SaaS model, over the cloud.
Cloud technology and the centralization of resources is, of course, what makes this all possible.
Industry-wide statistics look quite good. SaaS sales in 2010 – a time when the technology was relatively new – amounted to $10billion, a figure that has seen exponential growth since then. Growth is expected to mushroom within the next few years.
According to Gartner, customer-relationship management (CRM) is the most widely-used implementation of SaaS, amounting to 35% of all CRM implementation in the world. Gartner says that sales, customer service, marketing and social CRM are the 4 fastest-growing areas where SaaS and the power of cloud computing is being used.
The biggest question however, especially from a business-perspective, is what benefits does the Cloud or SaaS provide over traditional and/or conventional solutions such as off-the-shelf software?
For starters, off-the-shelf software solutions usually have an upfront cost, and often times, come with an annual license fee. SaaS or cloud-based services are all subscription-based, which is usually in the form of a monthly or a yearly-fee.
As far as recurring costs are concerned, all cloud-based business solution – including SaaS – work on a usage-based (per-use) or an on-demand model. Since the data is present on the cloud or with the provider, the business using the service can opt from a number of different modes of payment. These include charges per the number of people using the service, the number of transactions, number of events or instances the service was used, or of course, a fixed amount.
Both these things mean that (a) there is usually no up-front or initial cost to use the service, and (b) the running costs are typically much-lower (since it’s a pay-per-use model and you’re paying for what you use) when compared to over-the-counter solutions or alternatives which usually involve paying a yearly license fee.
So there are big savings to be had from a business perspective, which could add up to a lot of savings in the long-term.
“We saved over $4000 in up-front costs by moving to an entirely cloud-based solution [for e-mail, Web hosting, virus protection, and more]” says Bob Everett, the president of consulting firm Bottom-Line Consulting. “We were also able to substantially reduce our power bill and the costs needed to maintain and upgrade hardware” he adds.
Since all software is present on a central server and not on the client-side, it also means that new users (be it employees or customers) can be added to the setup seamlessly.
Another big advantage of cloud computing and SaaS is management. Basically speaking, the business outsources all aspects of managing the service to the provider, who is responsible for any and all hardware and software upkeep, maintenance and security. Valuable business resources that are saved as a result of this – such as operational costs, data storage costs, hosting expenses, other IT overheads, and personnel expenses – can be allocated to other departments, or the business can choose to save these costs.
The software and all data is also stored ‘on the cloud’ which eliminates the need to install expensive storage systems or servers (and hence the people required to maintain these) – another cost businesses and especially small businesses will be more than glad to do without!
Cloud-based solutions also don’t require the need for lengthy software installations or updates to be installed on the client-end.
These solutions also allow for plenty of collaboration options, as anyone who’s used a service similar to Dropbox will know.
What businesses end up with is fast, reliable, always-on access to business software/applications and services, access to all management tools without the extra hardware or expertise, less maintenance, a significantly lower costs – both initial costs and running expenses – and of course, a higher amount of security.
The jury’s still out on the latter though! Cloud computing and cloud services have been on the receiving end of skepticism when it comes to security. The fact that valuable and possibly-confidential and sensitive business data is stored somewhere on a remote server in the world and is hence at risk of going into the wrong hands or loss is no small concern!
This PC World article provides some experiences (such as the one quoted above) from business owners using the cloud, illustrating some of the advantages it offers to businesses today:
- “As a non-IT person, I find cloud-based applications easier to set up and use than many [computer] applications, and I don’t need to rely on internal IT support as much for assistance.” — Cristina Martin Greysman, executive vice president, business development, Vuzit.
- “A power surge nearly destroyed our in-house e-mail server. Had we not recovered it, a great deal of historical knowledge and valuable information would have been lost forever, not to mention the lost productivity for days or weeks. Now we have a secure, redundant, cloud e-mail system we can access anywhere, anytime, with a consistent interface, and it’s made our business stronger.” –Kevin Hart, partner and founder, Hart-Boillot.
Popular examples of cloud services and cloud-based solutions for small and medium businesses (and indeed for large corporations as well) out there – some of which are quite popular – include services such as QuickBooks Online, GT Nexus, MS Office 365, Google Apps, Google Docs, Intacct, Skype, Marketo, Microsoft SkyDrive, Dropbox, GetHarvest, and Tradecard, to name a few. A few more listed in this great article here.
I think now is the time that all SME’s should consider switching to the cloud. The benefits associated with doing so – despite the security-risks and lack of control of information – both of which remain big concerns – are just too big to ignore.
SaaS or Software as a Service solutions can be quite appealing for small and medium businesses, and can actually provide plenty of value to such businesses.
From an operations and management point-of-view, you have the obvious reduction in costs, and your business could also see a boost in productivity, better collaboration between employees and teams, automation of many business functions, and always-on access to services critical to the function of your business processes from anywhere in the world. This allows you, the business owner, to focus on core business functions and of course, focusing on customers and providing the best service to your clients!
Let us know what you think about cloud computing for businesses, cloud-based solutions and SaaS for businesses, SME’s and corporations in the comments!